Should I market my Nail Business on Groupon?

I am often asked by Nail Tech’s and Salon Owners if they should market their business on a daily deal website like Groupon. As a consumer, I subscribe to Groupon, so every morning I get highly discounted deals from all different types of business across various industries.But as a Business Owner, I will not subscribe my business to a daily deal website.

Maybe you subscribe to a website like this, and maybe you have been thinking about putting your Nail Business on one of these sites so that you can also get hundreds of customers buying products and services from you.

Before you decide to do so, I want you to take off the hat of a consumer and I want you to put on your Business Owner thinking cap. Let’s take a look at the pro’s and con’s of marketing your business on a daily deal website.

The Pro’s

On the plus side, registering your business on a daily deal website will give you exposure to a massive amount of consumers living in your geographic trading zone. Over the years, you may have heard “marketing experts” tell you how you need exposure, how you need to get your name out there. To a degree, there is some truth to that, but there is something else that you need even more than exposure. You need sales that result in positive cashflow.

Marketing is the learned ability to put the right message in front of the right people at the right time in order to create a disposition to buy your products and services at the price you ask.

Your business may be in desperate need a bunch of new customers, but what you need are sales that result in the positive cashflow. Who cares if you get hundreds of new customers but end up making a loss. That’s where the downside of working with a daily deal website comes in to play

The Con’s

To explain how a daily deal website works, I am going to share a true story with you. Last year a friend of mine ran a daily deal promotion and picked up more than 300 customers through the promotion. You might be thinking, “Wow that’s awesome her business must be booming!” But here’s what happened in reality.

Firstly, the daily deal website mandated that she had to give a 60% discount on her selected service of Gel Nails. That’s a huge discount! I don’t know about you, but I don’t like the idea of doing more work for less money.

Not so long ago, I was at a conference and I had a conversation with the Marketing Director of a daily deal website. She told me that in order to qualify for a deal, they now require that a Nail Business or a Salon give away a minimum of a 80% discount. if you want to ‘succeed with your daily deal campaign. How can anyone build a sustainable business giving away 80% discounts?

Back to my friend, instead of selling her Gel Overlays for R350, they were sold via the daily deal website for to consumers for only R210. But then she had to give away 50% of the sale price (R210) to the daily deal website for every client who bought.

Then the daily deal website also decucted 14% vat from her R105. That left her with R65.10 for every set of Gel Nails she sold.

So, she picked up 300 new clients but only made R65.10 per sale. But, it doesn’t stop there. As the Business Owner, she also had to account for product usage and staff commissions. In short, she got 300 sales but actually ran at a loss.

But there were also unintended consequences that came with her “successful” daily deal campaign. With the massive influx of new customers that month, her regular loyal customers couldn’t get their usual appointment because the Nail Bar was so busy. She ended up losing a bunch of her regular customers.

When you charge peanuts, you attract monkeys

Here lies the biggest problem behind attracting customers through the low prices of a daily deal website. After the campaign, my friend discovered that the type of clients who bought the deal are were only interested in low prices. Most of the people who bought the deal never came back to buy anything from her Nail Bar at full price! They just skipped to the next Nail Bar that offered a new deal.

Your nail business needs customers to survive, but you need customers who care about quality and value not price. I would rather attract ten new clients a month who care about quality than 300 who care only about price.

Why work longer and harder for less when there is a better way?

Have you ever stopped to think about what drives a daily deal websites? It is nothing more than email marketing! Daily deal companies build a database of qualified prospects using their website. Then all they do is send targeted promotions to people on the database who have indicated a preference for that type of deal, BUT, then they take most of your profit for the privilege of sending out an email on your behalf.

So, if you had to ask me if you should market your Nail Bar on a daily deal website, my answer would be NO!.

Why give away most of your profit when you could easily do the same thing? With the right knowledge and a few simple tools to make the job easier, you could grow your customer without sacrificing your profit. There is nothing stopping you from learning how to build your own valuable customer database that you can also send special offers and promotions to.

In fact, it is not hard and it won’t even cost you much. Professional email marketing will cost the average Nail tech less than R80 a month.)

We hope you found this business advice helpful. Let us know if there are any business issues you would like us to write about. In our next post, I am going to start a series showing you how to use Social Media sites like facebook, Google+ and Pinterest to market your Nail Business.